Best Home Improvement Loans of May 2022

A reminder that all loans might not cover all properties — for instance, FHA 203(k) loans are typically used for single-family properties, although other structures may be covered if they fall under certain restrictions — or the dollar figure you want, so make sure you search for the loan product that serves your needs.
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What Is a Home Improvement Loan?

7.49-18.00%
With a cash-out refinance, you use some of the equity in your home to get cash. In this refinancing option, you change the terms and amount of the loan, replacing your previous mortgage with a new one (so it’s not a second mortgage like with a home equity loan). You tap into some of the equity you’ve built up — the amount you can borrow is typically capped at around 80% of your home value — to get access to cash and a new fixed-rate mortgage. (Note: You’ll have to pay closing costs with this option.)

Why You Might Want a Home Improvement Loan

When you’re shopping around for lenders and home improvement loans, there are lots of items for you to consider. Here’s a shortlist of what items you want to review and consider when researching home improvement loans:

You require a large amount of funding. Sometimes a home reno project requires money you just don’t have (or can’t save for in a reasonable amount of time before you start a project).
It’s an emergency. If you’re on a tight timetable or an urgent need has popped up, home improvement loans might be the best option for your situation.
You want to pay a little bit over time. Perhaps you’d prefer to borrow funds and spread the payments out versus dropping a good chunk of change down all at once.

K to 0K

Secured Loans vs. Unsecured Loans

Exact requirements will vary by lender and loan type. In general, you’ll need some combination of the following:

Secured loan: This type of loan requires collateral, like a home. Since the borrower is putting up an asset, a lender typically views lending this money as less risky. A mortgage is an example of a secured loan.
- A secured personal loan is generally easier for a borrower to get.
- Secured personal loans tend to have lower interest rates.
Unsecured loan: This type of loan doesn’t require collateral; rather, a person’s creditworthiness helps a lender determine whether or not they should lend someone money. A student loan is an example of an unsecured loan.
- An unsecured personal loan might be more difficult for a borrower to qualify for.
- Unsecured personal loans tend to have higher interest rates.

Apply online

6 Types of Home Improvement Loans

Alternatively, if you have good credit, you could apply for a new credit card and likely get approved in a short period of time. Depending on your creditworthiness, look for a credit card with an introductory 0% APR for a set period of time (one year, 18 months, etc.) before the higher interest rate kicks in. That way you can pay the expense off over time if you need to, which is a money-saver in itself considering the average credit card APR hovers around 20%.

1. Credit Card

Best for Borrowers Who Want Options
If you prefer a traditional bank with brick-and-mortar locations, Wells Fargo might be your preferred choice. If you’re OK operating entirely online, a lender like SoFi will likely meet your needs.

2. Personal Loan

Many lenders require a minimum credit score to qualify for a home improvement loan. For example, you typically need a minimum credit score of at least 620 to secure a home equity loan.
More Information About Navy Federal Credit Union

3. Home Equity Line of Credit

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Key Features

4. Home Equity Loan

3.5 out of 5 Overall
Yes

5. Cash-Out Refinance

Wells Fargo
Discover is probably most known for being a credit card brand. But, the company also offers online banking accounts and products, and a variety of loans (on top of many credit cards, of course). Discover has a highly rated mobile app, over 60,000 fee-free ATMs and a quick interactive quiz on its website to help users find the best bank account for their needs.

6. FHA 203(k) Rehab Loan

Contributor Kathleen Garvin (@itskgarvin) is a personal finance writer based in St. Petersburg, Florida, and former editor and marketer at The Penny Hoarder. She owns a content-writing business and her work has appeared in U.S. News, Clark.com and Well Kept Wallet.
APR
Ultimately, the best home improvement loans or funding will depend on your qualifications, needs and availability. (Per the latter, some institutions have halted greenlighting HELOC loans with the current market in flux.) Of course, you will also want to consider personal loan rates, any origination fees, repayment terms and other factors when choosing how to pay for any home improvement projects. (Which we’ll touch on later in the article.)

There is no *one* home improvement loan; there are several types of loans that fall under the category of “home improvement.” (And sometimes this loan is simply referred to as a personal loan.) Qualifications vary by lender, but many have similar requirements — like having proof of employment and a government ID or birth certificate.

Lender	Best For	APR	Apply Online
Wells Fargo	Borrowers Who Want Options	5.74% to 19.99%	Yes	GET DETAILS
Navy Federal Credit Union	Military Community	7.49 to 18.00%	No	GET DETAILS
Discover	Customer Support	4.15% to 8.99% (for first liens)	Yes	GET DETAILS
SoFi	Borrower-Friendly Terms	5.74% to 21.78%	Yes	GET DETAILS
Upstart	Borrowers With So-So Credit	5.22% – 35.99%	Yes	GET DETAILS

5 Best Home Improvement Loans in May 2022

Best for Borrower-Friendly Terms

Wells Fargo

APR

Upstart is an AI lending platform that strives to increase access to affordable credit. Using its proprietary verification process, the majority of loans are approved nearly instantly with the platform. Going beyond creditworthiness, Upstart also reviews borrowers’ level of education, field of study and employment history as qualifying factors.

More Information About SoFi

Same-day funding
No prepayment penalties
No collateral required

More Information About SoFi

Credit score isn’t the major qualifier
No down payment and no prepayment penalty
Funds are available the next business day

APR
No
Discover offers home equity loans and mortgage refinance options to consumers. For home equity loans specifically, borrowers have access to fixed monthly payments, up to several hundreds of thousands of dollars in loan amounts and SoFi is one of the newer, savvier financial institutions on this list with an impressive scope of offerings and as of January 2022 is a chartered bank. SoFi offers the traditional banking products, plus lots of member benefits such as a referral program, member rewards and career coaching.
For each lender, it’s essential that you review the different loan options and terms for more information.

What You Need to Get a Home Improvement Loan

Check out The Penny Hoarder’s review of SoFi Checking and Savings for 2022.

A good or excellent credit score

Proof of income (w-2s or pay stubs for traditional employment, and likely years of records if you’re self-employed)

Government ID or birth certificate

A certain amount of equity in your property (a home equity line of credit, for example)

You must be a member of some banks (like with Wells Fargo) to secure a personal loan

5.74% to 21.78%

What to Consider When Looking at Home Improvement Loans

Discover

Total loan agreement (loan terms)

Loan amount and maximum loan amount

Monthly payments

Your credit history and credit score (and any upcoming purchases you may want to defer to keep your score intact)

Fixed interest rates

Adjustable interest rates

Secured personal loans (require collateral)

Unsecured personal loans (don’t require collateral)

Any prepayment penalties

Late fees

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Frequently Asked Questions (FAQs) About Home Improvement Loans

OK, this isn’t a loan, but it’s still an applicable payment option. If you’re in a pinch, you could put a home expense on an existing credit card. Ideally, this would be a card you can pay off at the end of the month without accruing interest (or better yet, one that will earn you points or other favorable benefits for using it).

A personal loan is an unsecured loan that can be used to pay for just about anything. If you need money quickly, this might be your best bet.

It’s a good idea to list out the total amount of money you want to fund your project. Compare different payment methods (loans, credit cards, home equity lines of credit, etc.) and see which terms and conditions meet your needs.
K-0K

Online application

To be sure, there are hoops to jump through with an FHA 203(k) loan and it takes a more significant amount of time to get approved — applications must be submitted through an approved lender, there are listed eligible rehab activities, you may only be able to work with certain contractors and you can only use this loan for a primary (not rental) residence, to name a few regulations. However, for the most part, you only need to put at least 3.5% toward a downpayment and can get qualified with a fair credit score.
We’ve answered some of the most common questions about home improvement loans to help you make a decision about whether to apply for one and which financial institution you might select.

Upstart

SoFi
Whatever your reasons, remember that all personal loans require some consideration of the pros and cons before you push forward.

Navy Federal Credit Union was founded in 1933 at the tail-end of the Great Depression. This credit union serves U.S. military members in all branches, veterans, Department of Defense employees and their family members — to the tune of 10 million member-owners. Navy Federal has branches all around the world and offers many of the traditional banking products.

Key Features
Is Any Type of Property Eligible for a Home Improvement Loan?

Credit score
Like most situations in the personal finance space, your individual needs and eligibility will determine the best home improvement loans and course of action for you.